Estonian retail sales growth decelerates to 1% y/y in February

Estonian retail sales grew just 1% y/y in February, according to data released by Statistics Estonia on March 31.

The result shows growth in the sector losing pace for a third month in a row. However, retail sales have now grown each and every month since June 2013, only occasionally falling below 5%.

The expansion continues to be fuelled by a tight labour market. Alongside fast growth in industrial output, that should offer momentum for GDP growth in the coming quarters.

GDP grew 1.6% in 2016, improving on the six-year low of 1.1% seen in the preceding year. Estonia's GDP is predicted to expand 2.2% in 2017, according to the European Commission. Swedbank offers the same forecast, but is more optimistic than Brussels about growth in 2018, which it sees at 2.8%, 0.1pp above the estimate of the EU executive.

In monthly terms, retail sales fell 9% in February. The annual growth came on the back of a 3% expansion in sales of manufactured goods. Most other segments showed growth as well, including an expansion of 7% in stores selling household goods and appliances, hardware and building materials.

Growing utility and social costs in Russia have caused an alarming increase in the number of poor Russians driven into debt and arrears have sextupled in the last three years to $11bn.

Russian government tightens the use of National Welfare fund use for financing infrastructure projects. The Russian government will only allow reserve funds held in the National Welfare Fund (NWF) when the liquid part of the fund is bigger than 7%

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